Oil prices hovered above US$72 a barrel yesterday in Asia, near an eight-month high as investors eyed signs the global recession may be easing.
Benchmark crude for delivery next month fell US$0.31 to US$72.37 a barrel by midday Singapore time in electronic trading on the New York Mercantile Exchange (NYMEX). On Thursday, it rose US$1.35 to settle at US$72.68, the highest since October.
An improving crude demand outlook helped bolster prices. On Thursday, the International Energy Agency in Paris said in its monthly survey that global oil demand would fall by 2.9 percent this year, better than its forecast last month of a 3 percent annual fall.
It was the organization’s first upward estimate of demand in 10 months.
“Oil prices are discounting positive economic growth by around the end of the third quarter,” said Christoffer Molke-Leth, head of sales trading for Saxo Capital Markets in Singapore. “If that doesn’t happen, prices at this level are overbought.”
Prices have more than doubled since March as investor optimism grew that the worst of a severe US recession was over.
The US Labor Department on Thursday reported that the number of newly laid-off Americans filing for jobless benefits fell last week by 24,000 to 601,000 — better than economists had forecast.
The US Commerce Department said retail sales rose 0.5 percent last month, interrupting two months of decreases and marking the largest gain since January.
“I think we’re going for a test of US$75,” Molke-Leth said. “Every time you see a little pullback you have funds ready to step in.”
Investors have also bought crude as a hedge against a weakening US dollar and the possibility of inflation down the road. The euro was steady at US$1.4102 yesterday.
“Fear of inflation is supporting the whole commodity complex, particularly oil,” Molke-Leth said. “The record fiscal and monetary stimulus will have inflationary implications.”
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